NO, REAL LOTTERY SPENDING HAS NOT DOUBLED SINCE 1995
Finance bloggers and occasionally finance professionals tend to treat the financially illiterate (which is unapologetically most of us) with disdain. So yeah, if I notice an abuse of power and an opportunity for critique I’m going to take it.
Last night just before 7pm the Washington Post released an article titled “Per Capita Lottery Spending Has Doubled Since 1995.” The author of this piece takes notice of some important trends like how state sponsored lotteries are disproportionately played by lower income households. Unfortunately, the main points of the article are only half baked.
The truth is, after accounting for inflation lottery spending has not doubled since 1995, not even close! Below is an illustration showing the supposed meteoric rise of lottery ticket sales over the past 22 years.
But account for inflation and the graph looks more like this…
More importantly, let’s not forget that frivolous lottery spending is a product of having free cash to spend. Yes, yes, lottery spending is up 144% over the past 22 years, but guess what else is up exactly 144% over the same timeframe? You guessed it, GDP – a major barometer that economists typically use to gauge the productivity and general standard of living for a given country. See below.
(no need to adjust for inflation)